"We did what we said we were going to do," said CEO Ben Verwaayen. "I am encouraged by our operating performance, measured by our ability to achieve our top-line, operating margin and cash flow targets." Those are all noble goals, and Fools especially appreciate management that puts a premium on generating cash.

But those targets were set awfully low. Let's review the "encouraging" performance:

Sales came in at $6.4 billion. After the fourth-quarter sales haul, the company saw sales drop 4.5% for the full fiscal year. The decline was within the guidance range of "low to mid single digits" sinkage for the year.

A 6% operating margin in the fourth quarter propped up the full-year figure to 2.7%. Within the "low to mid single digits" margin target, but at the low end of an uninspiring goal.

That "cash flow" target was really a debt reduction goal, and Alcatel did indeed pay down a bit of its outstanding loans.

Those targets have been known since the last report, and investors have punished the stock for setting the bar at ankle-level. In the last three months, an S&P 500 SPDR (AMEX: SPY) would have set you back by roughly 6%, while Alcatel lost 31% of its value. Oh, and a goodwill writedown of roughly $5 billion led to a net loss of $2.39 per depositary share. And the new guidance isn't any more ambitious than the old one, predicting an 8% to 12% sales drop in the telecommunications market across the whole industry, which would lead to "adjusted operating profit around break-even" in 2009.

On the bright side, the company actually did produce cash flow from operating activities to the tune of $686 million this quarter. There's also a comfy cash and marketable securities cushion of $5.9 billion to keep Alcatel from meeting Nortel's (NYSE: NT) grim fate.

But this company is still not keeping Cisco Systems' (Nasdaq: CSCO) networking division awake at night, and Ericsson (Nasdaq: ERIC) is still the undisputed king of telecom infrastructure. The trans-Atlantic merger of American high-tech and French market reach was supposed to create an unstoppable juggernaut, but I'm not going to worry about a company that is happy with near-breakeven operating margins. There are so many other tastiertartsout there.

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